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By: Ina Steiner

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AuctionBytes is in Georgetown, Delaware and will be covering the eBay versus Craigslist corporate governance trial that will kick off tomorrow.

Georgetown is a quaint town housing the Sussex County Courthouse and Court of Chancery, a few antique shops and restaurants, a private airport, and little else, but decisions that affect some of the largest U.S. corporations are decided in this tiny town.

Update 12/7/9: I'm sitting in the courtroom. Our photographer is outside hanging out with the AP and Reuters photographer, he got a shot of Jim Buckmaster walking into the building next store with his entourage. eBay's PR is in full force managing the media.

Just shook hands with Meg Whitman who is now in courtroom. I've asked for the opportunity to interview Meg and Pierre, we'll see what happens.

Meg is looking very composed, she's set to give testimony at 10 am, and then cross-examined this afternoon. This is the first time I'm aware she had to testify in a trial. When I covered the Supreme Court hearing in the MercExchange v eBay patent case, it was just the lawyers talking.

Update 9:58 am: Craigslist CEO Jim Buckmaster is here, but I don't expect Craig Newmark to show up today. Had a chat with Jim, he's sitting two rows ahead of me.

The Delaware Chancery courtroom is very small, it's being telecast and they have an overflow room with a tv. Dow Jones, AP, Reuters, Bloomberg and ClassifiedIntelligence are here. I had expected LA Times might have sent a political reporter given Meg Whitman is running for governor of CA, but they must be relying on the wire services.

Update 12/7/09 1:02 pm Meg Whitman gave testimony, now excused so she can get back to the campaign trail. Some significant factoids coming out. Meg said eBay paid Philip Knowlton $16 million for his 28% stake in CL shares, and paid Craig Newmark and Jim Buckmaster another $16 million for shareholder rights, such as a seat on the board.

eBay lawyer tried to establish that eBay was actively engaged in classifieds at same time negotiating with Craigslist, Craigslist lawyer tried to establish eBay was freely passing CL data around the company to help it make acquisition decisions etc.

Update: 3:48 pm: Craigslist lawyer getting to Pierre's fiduciary duty as a Craigslist director and whether he had a duty to inform CL of the competitive threat eBay posed. Pierre said he communicated urgency that eBay was developing a project and had an urgent commitment, but did not specifically say, here's a product, a name and a date.Tuesday December 8, 2009

Notes from second day of eBay v Craigslist trial, Josh Silverman questioned by eBay lawyer and Craigslist lawyer. 1:45 pm

In late 2005, then eBay CEO Meg asked Josh Silverman, now CEO of Skype, to get involved with Craigslist business while still responsible for Marketplaatz and eBay's auction business in the Netherlands. In March 2006 went to become CEO of Shopping.com.

Josh Silverman said the New York Attorney General's antitrust investigation into eBay's ownership of Craigslist shares impacted the relationship - every contact he had with CL needed to be vetted by lawyers.

In March 2006, Mr. Silverman said he made information available to Craigslist about the launch of two competitors that were launching - Google Base, Microsoft Expo. "We considered them very competitive threats in market, we wanted to be as helpful as possible to Craigslist to help them understand and continue to prosper in the face of that threat." He said Meg Whitman wanted to know what CL was doing to counter the attack.

He said Jim Buckmaster said he would check with his attorneys to see if he could talk about that.

Mr. Silverman said that in the few contacts he had with them, he said Craigslist always said, we don't think about competition. If someone comes along and can serve our community better, that's great.

Mr. Silverman seemed confounded about Craigslist's attitude toward competition. He said Craigslist was stockpiling revenues in the bank instead of investing them back into the company to make improvements to help serve its community, such as Trust and Safety and User Interface investments.

According to Silverman, CL's Craig Newmark and Jim Buckmaster were unresponsive to his efforts to reach out and provide them with information. CL's lawyer did show some emails that indicated Jim Buckmaster did respond to some of his responses, so this may be explored when Mr. Buckmaster takes the stand.

Silverman said the when eBay asked him about Craigslist while they were considering launching Kijiji in the U.S., he used a "train on tracks" analogy. The gist of what he said is:

If you take a snapshot and compare Craigslist to 5 years ago and 10 years ago, you'll struggle to notice anything that has happened in 10 years. If you fast forward, it is likely Craigslist would look exactly as it does today. If you think leading classified site will look like it does today then by all means, then they are the horse to bet on.

Craigslist lawyer asked if Silverman had ever disclosed to CL that eBay had asked them about CL management.

He asked if Mr Silverman was familiar with the term Chinese Wall, and asked about confidentiality requirements (keeping CL data confidential).

Update: 2:12 pmIn testimony today, Josh Silverman said he delayed Craigslist board meeting until eBay made decision to launch Kijiji in U.S. Craigslist lawyer shows there was some discussion about how much notice to give Craiglist (10 days or 2 weeks) and has asked Josh if he didn't delay the board meeting on purpose so as not to have to give greater advance notice to CL about the launch. Josh said eBay had not made the decision to launch, and he preferred to delay the meeting until a decision had been made.

Note about proceedings. Last night at 5pm, eBay lawyers told Judge Chandler that he had about an hours worth of questioning left for Josh Silverman, and that Craigslist likely wanted at least that much time to question him on the stand, so why not break for the evening. (The judge will go to 6pm latest if appropriate.)

But today at noon when Craigslist lawyer asked about breaking for lunch, eBay's lawyer said why not push through lunch because Josh Silverman had to go to an important meeting in Luxembourg tomorrow.

Craigslist lawyer said that was the first time she and the court heard of that, and they could have continued on last evening if they had known. Judge made lunch 40 minutes instead of an hour. At 3pm, we'll see if the judge accommodates Josh's schedule or Craigslists' lawyer's need to question JS. Wednesday, December 9, 2009 12:25 pm

Craigslist lawyer cross-examined all morning eBay counsel Brian Levey who helped negotiate the deal between eBay and Craigslist in 2004. Mr. Levey was responsible for drafting the NDA agreement and other legal issues surrounding the deal. (He calls himself the Quarterback on the deal.)

Much of today's questioning has to do with Mr. Levey forwarding confidential Craigslist information to the eBay team responsible for eBay's classified strategy to aid them in deciding whether and how to launch classifieds site in U.S. Mr. Levey said that was allowed under the agreement.

Also touched on decision to give Craigslist only 10 days notice of Kijiji's U.S. launch (mid June, when decision to launch was made in April). Lawyer points out that eBay told its own community on the same day.

In 2007, Josh Silverman recommended Jacob Aqraou take over his seat on Craigslist Board. Jacob was taking over global classifieds at the time. Lorrie Norrington agrees in an email that "conceptually it is a cleaner way to proceed." John Donahoe's response was, "Let's settle this once we nail down our US classifieds strategy, it may not make sense to introduce a new face if we are going to compete."

Because this case is about eBay losing its seat on the board because of actions Craigslist took, the issue of the board seat is important. Craigslist lawyers show some emails show that Jacob Aqraou believed eBay would lose its Board seat if it launched classifieds site (with job postings) in US. Lots of delving into this issue.

Update 12/9/09 3:00 pmeBay executive Garrett Price on the stand on Tuesday afternoon being questioned by eBay's lawyer. Mr. Price said Craigslists's Craig Newmark and Jim Buckmaster felt it unfair for Phillip Knowlton to get money from eBay for Knowlton's shares because they felt he had obtained the shares "in a fraudulent fashion" or did not warrant being rewarded for them. (Garrett Price's words.)

Mr. Price said Misters Newmark and Buckmaster made it clear to him that they would not approve a transaction with Phillip Knowlton receiving any funds if they did not receive the same amount of funds themselves.

According to Mr. Price, Newmark and Buckmaster did not want it known they received money. He said he thought they felt it would compromise their carefully crafted image that they weren't interested in monetary things and it would hurt their image.

Update: 3:49 pm: I wanted to make sure I heard this right, I double-checked with Wall Street Journal. (Jerry DiColo of Dow Jones is sitting behind me.) Garrett Price characterized the payment to Jim Buckmaster and Craig Newmark for certain rights to invest in the company as "extortion." See last update above for context.Update December 10, 2009 11:15 amGoogle was other suitor in Craigslist shares in 2004!Google was in talks with Craigslist in the summer of 2004 about acquiring Phillip Knowlton's shares of Craigslist. eBay ultimately purchased the shares in a 3-way deal between the parties.

Early testimony on Thursday revealed that Google had insisted on gaining controlling interest or full ownership in Craigslist.

Mr. Price said he had evaluated the likely untapped revenue potential of Craigslist across geographies and categories. (Craigslist is free in most categories.)

Update 3:40 pmGoogle and Warburg Pincus Vied with eBay for Shares in Craigslist

Craigslist founder Craig Newmark said he spoke to Google, eBay and Warburg Pincus in 2004 when disgruntled shareholder Philip Knowlton looked to sell his shares in the online classified site. Newmark was testifying at the eBay v Craigslist corporate governance trial on Thursday afternoon.

He said Google had only been interested in acquiring the whole company, and while he trusted Google and their Don't Be Evil philosophy, keeping control was the only way he could be sure.

He heard of the sale of company shares through some combination of Jim Buckmaster and Ed Wes.Update December 11, 2009 11:15 pmeBay's lawyer Mike Rhodes of Cooley Godward spent four hours cross-examining Craigslist founder Craig Newmark on Friday morning. Mr. Rhodes seemed frustrated at times with Mr. Newmark's deliberate approach to answering questions. Mr. Newmark remained calm and unflappable during what was sometimes grueling examination.

Summarizing and paraphrasing some of key points:

- Mr. Rhodes showed that Craigslist published some site metrics on its blog and that there were ways to get site metrics - however flawed or inaccurate - from sites such as Wayback machine and Compete.com. Craigslist has accused eBay of using Craigslist confidential and proprietary information inappropriately.

- Mr. Rhodes pointed to evidence that eBay had offered to help Craigslist in October 2004, including emails from Kent Walker and Rob Chesnut with regard to Trust & Safety issues. Craig Newmark said the help was not of value and he wasted his time in unfruitful efforts as a result.

- Mr. Rhodes pointed that the shareholder agreement between Craigslist and eBay in August 2004 did not include promises that former eBay CEO Meg Whitman personally made to Craig Newmark, and asked if it was Craigslist's legal team's fault for not putting Meg's promise into contract. Mr. Newmark has stated that Ms. Whitman broke her promises to him and called it a "betrayal of trust."

- Mr. Rhodes went over some of the emails between Craig, CEO Jim Buckmaster, and media consultant Susan Mactavish Best in which they were developing public statements on what to say on certain matters, including about eBay's launch of Kijiji (its online classified site). Mr. Rhodes pointed that Craigslist publicly stated that it was not concerned about competition.

- Mr Rhodes delved into legal issues of the corporate governance activities that Jim Buckmaster and Craig Newmark put into place in 2007 that are the heart of the case.

- Mr. Rhodes tired to determine what Craigslist does with the cash it generates, he said because former eBay executive and Craigslist Board member Josh Silverman had testified he was concerned about Craigslist's use of cash. He asked if Craigslist business throws off a fair amount of cash, and Mr Newmark said, "I don't know if I can disclose that in a public setting. Mr. Rhodes asked if the company's operating margins were over 80%, Mr. Newmark said "We don't disclose that." At that point, Craigslist lawyer objected, stating that it was giving confidential information that was under seal.

- Mr. Rhodes asked Mr. Newmark if he understood that the corporate governance measures do not address eBay scraping the Craigslist site; the purchase of Craigslist keywords on Google Adwords; and eBay's misuse of confidential data (these are issues Craigslist has alleged in a lawsuit against eBay in California).

Mr. Rhodes expressed great surprise when he purported to learn this morning that Clint Powell was Mr. Newmark's boss at Craigslist. ("Is he really your boss," he asked.)

Update: 3:00 pmCraig Newmark answered a few questions on the steps of the courthouse after his testimony. He said he was pleased to be done testifying. "I'm pretty grateful for the Court's cooperation."

He then said he was going to Washington tomorrow to meet with Veterans Affairs and judge an innovation contest. The VA lost ground in prior years, there is a backlog in medical claims and the GI bill is in bad shape, and 120,000 people have not been paid, he said.

A reporter from Bloomberg asked if Mr. Newmark could talk about the David and Goliath reference in general, which came up in his testimony (see AuctionBytes news article). Craigslist lawyer would not let him answer the question.

AuctionBytes asked if Craig saw parallels in the Craigslist community and the eBay community, he said people have the same values in common, those who use both sites.

Craigslist lawyer then whisked him away.

Craigslist CEO Jim Buckmaster is now on the stand.

Update: AuctionBytes was on location in Georgetown, Delaware for the first week of the trial. I am now reading accounts from both the wire services including Reuters and Associated Press and other outlets who are watching via remote video coverage, as well as reports from Charles McKinney, a freelance writer who has been reporting daily from Georgetown for the AIM Group. I've got more to say on what's transpired in this case, more to come later.

by: Patricia

Fri Dec 11 16:54:20 2009

" Mr. Newmark has stated that Ms. Whitman broke her promises to him and called it a "betrayal of trust."

Meg! Say is ain't so!!!! I cannot believe that the woman running for governor here in California and promising us the world and gushing in radio ads about how she created thousands of jobs for us little guys could possibly LIE! I'm flabbergasted (and amused too) ;-)

AuctionBytes on Location at eBay v Craigslist Trial

by: nora

Fri Dec 11 20:46:55 2009

Pierre on the stand video. I don't have any comments on this one.

http://www.youtube.com/watch?v=2R33Q0r99mY

AuctionBytes on Location at eBay v Craigslist Trial

by: Ming the Merciless

Fri Dec 11 21:58:15 2009

Perhaps a few of the California sellers Meg and The Ho ruined should volunteer to do radio commercials for Neg Meg's opposition.

A few of those would end the radio charade she's engaged in.

California's fiscal problems are far too serious to turn them over to the monkey train to fix.

AuctionBytes on Location at eBay v Craigslist Trial

by: Patricia

Fri Dec 11 22:18:22 2009

@Ming most of our radio talk stations are for her...mainly because she's a republican and Rupert Murdock's network hands out their talking points every morning. If she loses it won't be by much.

AuctionBytes on Location at eBay v Craigslist Trial

by: Ming the Merciless

Sat Dec 12 03:02:47 2009

Suggest California ebay sellers contact the Stephanie Miller Show out of LA which is one of the highest rated progressive talk shows in California and the country.

The Meg follies would be good grist for her show.

Call these reich wing shows and tell the truth of about Whitman although you may have to pose as a supporter to get by their screeners.

AuctionBytes on Location at eBay v Craigslist Trial

by: Et tu, Brute!

Sun Dec 13 02:00:12 2009

eBay International traffic ranking remains at 25.

HOWEVER, Amazon has NOW climbed to 21, and is closing in on the TOP TWENTY in International site traffic ranking!

This has REALLY got to be toasting eBay execs!

AuctionBytes on Location at eBay v Craigslist Trial

by: Michael Scott

Sun Dec 13 12:24:47 2009

Internet Retailer just came out with Best of 2009 issue. Ebay gets one mention in Mobile apps & nowhere else in magazine. Amazon has features in 3 sections of the issue.Keep up the Good work, Dunderho.

AuctionBytes on Location at eBay v Craigslist Trial

by: x-mas wish

Mon Dec 14 05:01:57 2009

If there is a god, please, pretty please have corrupt ebay LOSE this case and lose lots of $ and street cred.

AuctionBytes on Location at eBay v Craigslist Trial

by: Patricia

Mon Dec 14 14:57:50 2009

''It was clear from last week's testimony that eBay's executives had tried their best to acquire control of Craigslist so they could monetize the site, and were not only frustrated by Craigslists' Newmark and Buckmaster's commitment to put community ahead of monetization, but appeared disdainful as well. ''

Is there anybody here who doesn't believe this? We all know Ebay didn't buy those shares simply to be Mr. Nice Guy - their interest was in revenue and nothing else and nobody else...community be damned! I guess a snake in the grass can wriggle out of just about anything. It will be interesting to see how Ebay does it.

AuctionBytes on Location at eBay v Craigslist Trial

by: buck efay

Mon Dec 14 15:11:26 2009

No they had another reason besides, to learn the ins & outs of the classifieds business & to get to see all of Craig's proprietary info. The owners of Craig's obviously never heard what happens when you lay down with snakes.

AuctionBytes on Location at eBay v Craigslist Trial

by: nora

Mon Dec 14 16:04:09 2009

Not too much news about the trial today, so I was searching around and found some Buckmaster testimony;

Be Careful Whom You Trust: Craigslist CEO Says He Had Worries About eBayThe Legal Intelligencer, December 15, 2009

Buckmaster was one of the Delaware trial's most anticipated witnesses and is expected to continue his testimony through most, if not all, of Monday's court session.

Under questioning by attorney Michael Clyde of the Phoenix office of Perkins Coie, Buckmaster focused extensively on the period in the summer of 2007 when the relationship between the two companies was at its nadir, and on a pair of CEO-to-CEO e-mails that summarized each side's position and presaged the court battles to come.

The first e-mail was sent July 12, 2007, from Buckmaster to Whitman (who is now a candidate for governor in California), and said that the then-recent launch of Kijiji by eBay had made it clear to Buckmaster that the two companies had differing ideas about competition.

Those differences were ''perfectly fine generally speaking,'' Buckmaster wrote, ''but does not feel right coming from a large shareholder privy to our financials and other confidential information.''

Buckmaster wrote that he had ''great esteem'' for both Whitman and eBay founder Pierre Omidyar, but that ''it is my sad duty to report that we are no longer comfortable having eBay as a shareholder,'' and that he wanted to ''explore options for our repurchase, or for otherwise finding a new home for these shares.''

Buckmaster testified that Whitman's response, sent on July 23, 2007, was oddly non-responsive to his strong expressions of concern.

In the e-mail, Whitman opens by thanking Buckmaster for his ''kind words'' about her and Omidyar.

She then wrote that ''we are so happy with our relationship with Craigslist, that we could neither imagine doing anything to disturb our personal rapport with you or [Craigslist founder] Craig [Newmark], nor parting with our shareholding in Craigslist Inc. under any foreseeable circumstances.''

Buckmaster testified that he considered Whitman's next sentence to be threatening.

''Quite to the contrary,'' Whitman wrote, ''we would welcome the opportunity to acquire the remainder of Craigslist Inc. we do not already own whenever you and Craig feel it would be appropriate.''

Buckmaster testified that he interpreted Whitman's remarks to mean that eBay was intent on one day owning a controlling stake in Craigslist ''if necessary over our dead bodies.''

Asked by Clyde to talk about the conclusions he drew from Whitman's e-mail, Buckmaster testified that he believed ''she was going to turn her back on us — on promises she had made to us,'' including the promise to being open to an amicable parting of the ways if the relationship proved uncomfortable.

''This was a slamming of the door in the face,'' Buckmaster said.

….now, here’s a song for Meg Whitman and eBay

http://www.youtube.com/watch?v=IXObWIMX8sY&feature=related

…and Craigslist has it’s own ''Weird Al'' Yankovic song

http://www.youtube.com/watch?v=y4sALru9IJk

AuctionBytes on Location at eBay v Craigslist Trial

by: Just me

Mon Dec 14 16:25:51 2009

LOLYes I think Weird Al is telling us all in art that ebay is just not cool anymore. Besides, the dorky ebay video was never half that good.

Doesn't matter how this trial turns out either, ebay has been shown (again) to be among the lowest forms of life regardless.

by: Patricia

Don't know if anyone posted this article. Its dated Dec. 16, 2009:

http://abcnews.go.com/Business/wireStory?id=9353044

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